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Performance Budget Submission for Congressional Justification

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Mission Statement

The Agency's mission is to improve the outcomes and quality of health care, reduce its costs, address patient safety, and broaden access to effective services, through the establishment of a broad base of scientific research and through the promotion of improvements in clinical and health system practices, including the prevention of diseases and other health conditions.

The Agency promotes health care quality improvement by conducting and supporting health services research that develops and presents scientific evidence regarding all aspects of health care.

Health services research addresses issues of organization, delivery, financing, utilization, patient and provider behavior, quality, outcomes, effectiveness and cost. It evaluates both clinical services and the system in which these services are provided. It provides information about the cost of care, as well as its effectiveness, outcomes, efficiency, and quality. It includes studies of the structure, process, and effects of health services for individuals and populations. It addresses both basic and applied research questions, including fundamental aspects of both individual and system behavior and the application of interventions in practice settings."1

To fulfill this mission, AHRQ supports and conducts research that is driven by the needs of users at three levels of the health care system:

  • Policy decisionmakers at the Federal and State level.
  • Systems decisionmakers in hospital, health plans, and provider organizations.
  • Patients and their families.

There are three overarching goals that the Agency uses to frame its activities:

  1. Support Improvements in Health Outcomes.
  2. Strengthen Quality Measurement and Improvement.
  3. Identify Strategies to Improve Access, Foster Appropriate Use, and Reduce Unnecessary Expenditures.

1. Eisenberg JM. Health Services Research in a Market-Oriented Health Care System. Health Affairs, Vol. 17, No. 1:98-108, 1998.

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Summary of FY 2003 Request

The Fiscal Year 2003 request reflects a decrease of $48,659,000 from the Fiscal Year 2002 level, for a total of $251,700,000. The request:

  • Provides a $5 million increase for the Secretary's Patient Safety Initiative.
  • Maintains funding for several priority programs.
  • Provides no new funds for non-patient safety research and training grants.
  • Reflects a $33,754,000 general reduction to grant and contract commitments.

Specifically, the request will provide funding for:

  • Translating Research Into Practice grants.
  • The Medical Expenditure Panel Survey (MEPS).
  • The Healthcare Cost and Utilization Project (HCUP).
  • The Consumer Assessment of Health Plans (CAHPS®).
  • Grant and contract commitments related to the Secretarial Initiative on Patient Safety, plus $5,000,000 in new funds for patient safety.
  • Increases in research management, including costs related to consolidating AHRQ space.

Within our total request, AHRQ will provide $10,000,000 to the Department of Commerce to be used for the Current Population Survey. The request level will require reductions to some combination of research grant, research contract, and Inter-Agency Agreements.

The $48,659,000 decrease is arrayed below by AHRQ's budget activities:

Difference Between FY 2002 and FY 2003 Funding Levels for Selected Activities

Activity HCQO MEPS Program Support Total

Department of Commerce: Current Population Survey





Improving Patient Safety (Includes Contracts and Grants)










Research Management





Accrued Retirement and Health Benefits Costs





Non-Patient Safety Research and Training Grants—Commitments





Non-Patient Safety Research and Training Grants—New





Non-Patient Safety Research Contracts





Total Change





Secretarial Initiatives

The health care we receive today can be the most technologically sophisticated and of the highest quality in the world. However, the clinical care and organizational strategies known to be effective are not always the ones we are offered. As a result, sometimes patients fail to receive proven effective clinical preventive services that would prevent illness and disability. For example, failure to receive immunizations for influenza and pneumonia is reflected in preventable hospitalizations for serious respiratory illness and avoidable expenses. Similarly, inadequate management of asthma in children results in thousands of avoidable hospitalizations.

Of concern is that some health care actually causes harm. A report in 1999 concluded that tens of thousands die each year from errors in their care—so many that medical errors could be among the top 10 causes of death in the United States. While medical science and technology continue to provide promising advances, our health care system often struggles to keep up and deliver those advances to patients in the form of improved health care.

Recognizing this, the Institute of Medicine gravely reported earlier this year that "(b)etween the health care we have and the care we could have lies not just a gap, but a chasm."

As the Nation's awareness of this chasm has increased, so too has support for AHRQ's quality research agenda. This report recognizes AHRQ as the Federal agency uniquely positioned to provide the evidence base to bridge the quality chasm: AHRQ's core mission is to ensure that the knowledge gained through health care research is translated into measurable improvements in the health care system. AHRQ's recent appropriations have enabled expansions in important areas of research, tool development and dissemination.

AHRQ requests $5,000,000 of funding for activities that promote the translation of patient safety research into programs and products for health care systems with the goal of having measurable improvement in the safety of healthcare for Americans. The proposed budget activities will allow the Department to act immediately on what we know works in improving patient safety while building more knowledge for the future. These activities will be conducted in concert with other parts of HHS, specifically:

  • The Centers for Disease Control and Prevention (CDC).
  • The Centers for Medicare & Medicaid Services (CMS).
  • The Food and Drug Administration (FDA).
  • The Health Resources and Services Administration (HRSA).
  • The Indian Health Service (IHS).
  • The Office of the Assistant Secretary for Planning and Evaluation.

Activities will be conducted through the existing Patient Safety Task Force collaboration and the development of new coordinated activities. Through this coordination, the Department will be able to develop synergy among the various OPDIV investments in improving patient safety to ensure that the coordinated Departmental effort will produce a "whole which is greater than the sum of the parts."

The activities at AHRQ will continue to build on and enhance the work begun in FY 2001, and which continue in FY 2002. The FY 2003 program has two components:

  • Challenge Grants—$3,000,000.
  • On-site Patient Safety Experts—$2,000,000.

To begin to streamline research across the Department, the Secretary has established the Research Coordination Council (RCC). This forum will evaluate research priorities across HHS to ensure that efficiencies are realized.

Information Technology

AHRQ's request includes funding to support Departmental efforts to improve the HHS Information Technology Enterprise Infrastructure. The request includes funds to support an enterprise approach to investing in key information technology infrastructure such as security and network modernization. These investments will enable HHS programs to carry out their missions more securely and at a lower cost. Agency funds will be combined with resources in the Information Technology Security and Innovation Fund to promote collaboration in planning and project management and to achieve common goals such as secure and reliable communication and lower costs for the purchase and maintenance of hardware and software.

Unified Financial Management System

The Unified Financial Management System (UFMS) will be implemented to replace five legacy accounting systems currently used across the Operating Divisions. The UFMS will integrate the Department's financial management structure and provide HHS leaders with a more timely and coordinated view of critical financial management information, including more accurate assessments of the cost of HHS programs. It will also promote the consolidation of accounting operations and thereby reduce substantially the cost of providing accounting services throughout HHS. Similarly, UFMS, by generating timely, reliable and consistent financial information, will enable OPDIV Heads and program administrators to make more timely and informed decisions regarding their operations.

Absorption of the Costs of the Health Benefits of Commissioned Corp Annuitants Age 65 and Over

For military retirees health benefits, current law requires agencies to be charged for the accruing cost for military retirees over age 64, and the budget proposes to extend this to military retirees under age 65 in 2004. AHRQ will absorb these costs. The proposal does not increase or lower total budget outlays.

Accrued Retirement and Health Benefits

The budget also requests an increase of $86,000 in FY 2003 for accrued retirement and health benefits is associated with the proposed Managerial Flexibility Act of 2001. This legislation requires agencies, beginning in FY 2003, to pay the full Government share of the accruing cost of retirement for current Civil Service Retirement System (CSRS), Central Intelligence Agency (CIA), and Foreign Service employees, and the Coast Guard, Public Health Service, and National Oceanic & Atmospheric Administration (NOAA) Commissioned Corps.

The legislation also requires agencies to pay the full accruing cost of post-retirement health benefits for current civilian employees. The intention of the legislation is to budget and present the full costs of Federal employees in the accounts and programs where they are employed. This legislation is part of an initiative to link budget and management decisions to performance by showing the full cost of each year's program operations together with the output produced that year. These accrual costs are shown comparably in FY 2001 and FY 2002.

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How AHRQ's Research Helps People

AHRQ's mission, health care improvement through research, means that the work of research is not completed with the publication of findings in a research journal. While an important measure of the quality and productivity of the research enterprise, the number of publications found in the leading research journals cannot solely measure the full value of research. To be successful in fulfilling AHRQ's mission, research must be used to improve the day-to-day functioning of the U.S. health care system. The results of research must be placed in the hands of those who can put it to practical use and produce even safer and more effective, and cost-effective health care.

Across the Nation, policymakers, consumers, patients and providers of care are making better-informed, cost-effective health care decisions and are receiving higher quality care thanks to AHRQ-supported research. The following are just a few examples of the health services research AHRQ has sponsored and how the results of that research have been put into practice by policymakers and those who make purchasing decisions, patients and consumers and providers of care.

Policymakers Use AHRQ Research in Various Ways

In FY 2001, AHRQ responded to more than 2,500 requests for information from Federal, State and local government officials searching for evidence to inform their decisions. As a scientific research agency, AHRQ's role in responding to these requests is a simple one: to ensure that policymakers have the benefit of our existing knowledge and past experience so that they can make informed decisions. They should not be forced to "reinvent the wheel."

AHRQ uses a number of approaches in responding to these requests:

  • Rigorous analyses of the scientific and medical literature.
  • Conducting and supporting short-term research on the impact of past policy interventions at the Federal and State levels.
  • Undertaking simulations of the potential impacts of new policy options.
  • Other forms of technical assistance.

The following examples represent selected instances in which AHRQ research has been used by policymakers to improve the functioning of the entire U.S. health care system.

The Center for Medicare and Medicaid Services (CMS) revised its Medicare Coverage Issues Manual to include a national coverage policy permitting coverage for the treatment of actinic keratoses (AK).

AK is a common skin condition that is often the precursor of skin cancer. This coverage decision was based largely on the AHRQ Technology Assessment for Actinic Keratoses Treatment.

This assessment suggests that the presence of AKs is associated with the development of squamous cell carcinoma (SCC) more than other factors. SCC has the potential to metastasize and accounts for a large percentage of all non-melanoma skin cancer deaths in the Medicare population. Before the national coverage policy was issued, coverage decisions on whether to reimburse for AK removal were left up to local Medicare carriers. As a result, many carriers developed AK policies with varying degrees of restriction. The new national policy set by CMS supersedes any policies currently used by local carriers.

In the last 2 years, AHRQ has nine technology assessments for the Coverage and Analysis Group at CMS; these technology assessments inform coverage decisions which are issued by CMS. CMS used three of these products to change coverage policy. Coverage decisions related to the remaining six technology assessments are still pending in CMS. Furthermore, three additional technology assessments are currently under way.

"This decision will enable all Medicare beneficiaries to get these lesions removed before they can develop into cancer. It makes sense for Medicare to provide uniform coverage nationally for proven treatments that prevent deadly disease."

—Tommy Thompson
Secretary, Health and Human Services

As a result of an AHRQ funded study, the State of North Carolina is providing free Vitamin D supplementation to breast fed infants across the State.

Researchers at the Center for Education and Research on Therapeutics (CERTs) at the University of North Carolina (UNC) at Chapel Hill, and Wake Forest University School of Medicine, Winston-Salem, found that many exclusively breast-fed, dark-skinned infants would benefit from Vitamin D supplementation. All of the rickets cases among pediatric patients were African-American children who were breastfed and who had not had Vitamin D supplementation.

The study's findings caused an immediate change in North Carolina public health practice. The North Carolina Pediatric Society requested that the State of North Carolina distribute a multivitamin supplement free-of-charge to any exclusively breastfed infant or child, 6 weeks of age or older. Funding for the supplementation was provided through a Maternal and Child Health Block Grant and distributed through the Supplemental Nutrition Program for Women, Infants and Children.

Over a 16-month period, more than 1,500 children received this supplementation at a cost of about $1.50 per month, per child. Fact sheets were developed to help educate parents and health professionals about the need for vitamin D supplementation for the breastfed infant and child. The one-page informational sheets were printed in English and Spanish for parents and in English for health professionals.

Select for the CERTs Fact Sheet.

The Healthcare Association of New York State (HANYS) uses the AHRQ Quality Indicators (QIs) to assess the quality of care delivered by over 200 hospitals in New York State.

A number of programs have been implemented to improve health care quality based on these reports. For example a program was developed to expand awareness of the availability and effectiveness of immunization programs, after QI reports showed low rates of adult immunization for pneumonia and influenza. Similarly, when QI reports showed that certain areas of the State had high rates of admission for diabetes, a diabetes center of excellence was founded to improve the quality of care of patients with diabetes.

Select for AHRQ Quality Indicators.

HANYS members describe their reactions to the reports that use the QIs:

"The reports are great. They raise interesting issues for us and our physicians want their own copies."

—a NY hospital chief operating officer

"This is a wonderful tool! It has enabled me to engage physicians in a substantive discussion on developing a center of excellence."

—a NY hospital network executive

Patients Get Better Care Because of AHRQ-Sponsored Research

The pace of medical discovery and innovation has never been greater. But experience has repeatedly demonstrated that great opportunities for improving health, developed through biomedical research, are easily lost if physicians and patients are unable to make the best use of the knowledge in everyday care. Failure to understand which services work best, under what circumstances, and for which types of patients contributes to the ever-increasing cost of care, low quality and ineffective care, threats to patient safety, and avoidable loss of lives.

AHRQ's mandate is to close that gap by focusing on the effectiveness and cost-effectiveness of health care services and the organization, management, and financing of the health care systems through which those services are delivered. AHRQ research ultimately assures that patients and society reap the full rewards of basic research and biomedical innovation.

Because AHRQ's research addresses so many different aspects of the ways in which patients receive medical care, it may be easier to understand the broad scope and impact of AHRQ's research by looking at the role it plays when a patient needs care.

Rosa, who is 60 years old, goes to a hospital emergency room with chest pains. If Rosa is having a heart attack, her chances of recovery are better if she is treated immediately. All too often test results are inconclusive and precious time is lost while physicians await the results of further testing.

But Rosa is fortunate. The hospital uses electrocardiograph which has special software developed by AHRQ research that predicts the likelihood that her chest pain is the result of a heart attack. It is. The software also predicts that her chances of dying or having a stroke could be reduced if the emergency room physicians administered "clot busting" drugs, known as thrombolytic drugs, immediately. They did.

Her physicians also receive a computerized reminder to prescribe a beta-blocker to relax the patient's heart and reduce her chance of a second heart attack. AHRQ supported research demonstrated that this life-saving medication is substantially under-used, and that computerized reminders can assure that the right patients are prescribed beta-blockers.

While Rosa is in the hospital, her beta-blocker prescription and other medications are monitored by a computer medication system designed to reduce the potential for prescribing errors and adverse drug events. This system was installed as a result of AHRQ research that found that the rate of medical errors in hospitals could be significantly reduced using computerized reminder and alert systems.

When she is released, she is given information on a home-based cardiac rehabilitation program, Heartlinks ( that uses the Internet as the primary link between case manager, patient, and family member, developed by AHRQ.

AHRQ-sponsored research also helps patients with chronic disease become active participants in their care and spend less time in the hospital.

  • A disease management program, developed with AHRQ support, has experienced widespread adoption and is now offered by organizations throughout the United States, as well as in China, England, New Zealand, Australia, Norway, and Sweden.

    The research project (funded by AHRQ and the State of California) demonstrated the benefit of chronic disease self-management in reducing hospitalization among people with multiple chronic conditions. This 5-year research project developed and evaluated a community-based self-management program that assists people with chronic illness. More than 1,000 people with heart disease, lung disease, stroke or arthritis participated in the six-month trial and were followed for up to 3 years.

    Patients who completed this study showed significant improvement in exercise, cognitive symptom management, communication with their doctors, self-reported general health, health distress, fatigue, disability, and social/role activities limitations. In addition they spent fewer days in the hospital. The study, completed in 1996, demonstrated that it is possible to successfully educate patients with different chronic diseases in the same intervention at the same time. The course content has also been published as a book, Living a Healthy Life with Chronic Conditions, and an audio relaxation tape, Time for Healing ( These results are also being used in the VA.

  • Let Me Decide.

    Let Me Decide is a comprehensive advance directive that allows individuals and their families to specify a range of health care choices for life-threatening illnesses, cardiac arrest, and nutrition. The tool was developed by Dr. David Malloy of McMaster University, through a grant from AHRQ and was based on AHRQ funded research suggesting that systematic use of such a program could reduce use of health care services without affecting satisfaction or mortality. With more specific information than is sometimes found in generic advance directives, the Let Me Decide Advance Directive contains a personal statement, a definition of terms used in the document and a health care chart that allows specific decisions regarding levels of care preferences (palliative, limited, surgical and intensive) as well as what is desired in terms of feeding and cardiac arrest.

    In addition to the advance directive, a complete educational package has been created by New Grange Press that consists of the booklet entitled, Let Me Decide, three videos, a set of slides, research papers, a cassette audio tape and Let Me Decide Advance Directives forms with instructions. The booklet is available in eight languages and the video is available in both French and English.

Let Me Decide "gives a better idea of what to do in different situations."

—Barb Murphy, R.N.
Maple Villa Long-term Care

AHRQ Provides Evidence-Based Information for Consumers, Providers and Purchasers of Services

AHRQ, in conjunction with partnership with both public and private sector partners supports a variety of projects that help people make important choices about the health care they receive. For example:

  • The Center for Medicare & Medicaid Services' very popular Web site, NursingHome Compare,, grew out of an AHRQ-funded project to develop a consumer information system to help people find data on nursing homes. The site provides detailed information about the performance of every Medicare and Medicaid certified nursing home in the country. The site was launched 2 years ago and has an average of 400,000 page views per month.
  • The National Business Coalition for Health (NBCH) has adopted findings from several AHRQ products, including the July 2001 report on Making Health Care Safer: A Critical Analysis of Patient Safety Practices. The coalition incorporated them into their 2002 NBCH request for information (RFI), a standard tool that affiliated employers use to solicit potential health plans with which to contract.
  • The State of Washington's Health Care Authority is using a decision support tool originally developed through an AHRQ SBIR grant that incorporates CAHPS® (among other data) to help State employees and retirees choose among health plans. The tool was developed as Health Plan Select, but, as customized by Washington State, is called Compare-A-Plan. Beginning with the State's fall open enrollment period in late October 2001, Compare-A-Plan will be on the Washington State government's Web site. The tool is designed to be seamless with the existing Web site, providing information on the various plans offered (what each covers, how to go about choosing a plan), as well as providing enrollment forms.

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Budget Activities

All of AHRQ's funding is managed and appropriated in the following three budget activities:

  1. Health Care Costs, Quality, and Outcomes (HCQO).
  2. Medical Expenditure Panel Survey (MEPS).
  3. Program Support.

Health Care Costs, Quality, and Outcomes (HCQO)

The purpose of the Research on Health Care Costs, Quality and Outcomes activity is to support and conduct research that improves the outcomes, quality, cost, use and accessibility of health care. Accordingly, the Agency has identified three strategic plan goals that feed into this budget activity:

  1. Supporting improvements in health outcomes.
  2. Strengthening quality measurement and improvement.
  3. Identifying strategies to improve access, foster appropriate use, and reduce unnecessary expenditures.

The key themes throughout all three goals are to fund new research and to translate research into practice. In addition, AHRQ also has strengthened its commitment to support research that will improve health care for vulnerable populations. Lastly, AHRQ has enhanced specific activities that support all of our strategic goals.

For details from the justification, select Research on Health Costs, Quality, and Outcomes.

Medical Expenditure Panel Survey (MEPS)

The objectives of AHRQ's Medical Expenditure Panel Survey are to provide public and private sector decisionmakers with the ability to:

  • Obtain timely national estimates of health care use and expenditures, private and public health insurance coverage, and the availability, costs and scope of private health insurance benefits among the U.S. population.
  • Analyze changes in behavior as a result of market forces or policy changes (and the interaction of both) on health care use, expenditures, and insurance coverage.
  • Obtain information on access to medical care, quality and satisfaction for the US population and for those with specific conditions, and for important subpopulations.
  • Develop cost and savings estimates of proposed changes in policy.
  • Identify the impact of changes in policy for key subgroups of the population (i.e., who benefits and who pays more).

These objectives are accomplished through the fielding of the Medical Expenditure Panel Survey. MEPS is an interrelated series of surveys that replaces the National Medical Expenditure Survey (NMES). MEPS not only updates information that was last collected more than a decade ago in fiscal year 1987, but also provides more timely data, at a lower cost per year of data, through the move to an ongoing data collection effort.

For details, select Medical Expenditure Panel Survey.

Program Support

Program Support provides support for the overall direction and management of the AHRQ. This includes the formulation of policies and program objectives; and administrative management and services activities.

For details from the justification, select Program Support.

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Current as of February 2002


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